Senate Approves Military Payday Loan Legislation
By Desmond CarlislePayday Loan Writer
Legislation sponsored by Senators Jim Talent (R-Missouri) and Bill Nelson (D-Florida) to stop predatory payday loan practices targeted at members and their families has been approved by the U.S. Senate.
The Talent-Nelson Amendment to the Defense Authorization Bill would limit the Annual Percentage Rate (APR) charged to soldiers and their spouses for a cash loan. In many cases, lenders are charging over 800 percent APR on military payday loans to armed service members, leaving them in financial distress.
In this month's issue of Seapower magazine, Admiral Mike Mullen, Chief of Naval Operations, U.S. Navy, commented on the pressing concern.
"A sailor's financial readiness directly impacts unit readiness and the navy's ability to accomplish its mission," he said. "I am concerned with the number of sailors who are taken advantage of by predatory lending practices, the most common of which is the payday loan."
According to Sen. Talent, the Department of Defense is reporting that predatory practices are directly impacting military readiness.
"We have to step in and stop these predatory lenders from making a quick buck at the expense of the livelihood and future of those defending our freedom," Talent said.
The legislation would mean the long-awaited end of exorbitant 800-percent interest charges. In the House, U.S. Representative Sam Graves (R-Missouri) is the sponsor of companion legislation that has strong bipartisan support, including 34 Democrat and 30 Republican co-sponsors.
"Recent studies have shown that payday lending outlets are prevalent around military installations and are readily available through the Internet," said Dr. David Chu, Undersecretary of Defense for Personnel and Readiness. "This legislation provides the limits needed to motivate service members to consider solutions that may be difficult in their short term, but provide financial stability for their future."
Travis B. Plunkett, Legislative Director of Consumer Federation of America, lauded the senators' efforts and praised the payday loan progress.
"The Consumer Federation of America applauds Senators Talent and Nelson for moving to stop predatory lenders from entrapping military families in loan schemes with triple digit interest rates," he said. "This important amendment will improve the finances, morale and readiness of members of the military saddled with these abusive loans."
The Talent-Nelson amendment applies only to military personnel and offers national protection from predatory payday advance loan providers.
According to the Navy-Marine Corps Relief Society (NMCRS), U.S. military families pay an estimated $80 million annually in personal loan fees alone. The new amendment establishes a federal ceiling at 36 percent APR. Furthermore, it does not prohibit states from adopting legislation with a lower limit.
In addition, an impressive list of military and veteran service organizations, with over 5.5 million members, support the Talent-Nelson legislation. The Association of the United States Army (AUSA), Military Officers Association of America (MOAA), Veterans of Foreign Wars (VFW), Navy League of the United States (NLUS), Air Force Association (AFA), and Marine Corps League (MCL) and many others have all voiced overwhelming support.
